Exchange rate uncertainty and the timing of Chinese outward direct investment

Authors

Jianhong Qi
Hui Liu
Zhaoyong Zhang, Edith Cowan UniversityFollow

Author Identifier

Zhaoyong Zhang

https://orcid.org/0000-0001-9596-2648

Document Type

Journal Article

Publication Title

International Review of Economics & Finance

Volume

76

First Page

1193

Last Page

1204

Publisher

Elsevier

School

School of Business and Law

RAS ID

30605

Funders

Major Program of China’s National Social Science Sumitomo Foundation

Comments

Qi, J., Liu, H., & Zhang, Z. (2021). Exchange rate uncertainty and the timing of Chinese outward direct investment. International Review of Economics & Finance, 76, 1193-1204. https://doi.org/10.1016/j.iref.2019.11.008

Abstract

This paper investigates the timing of Chinese ODI under exchange rate uncertainty by employing the Cox proportional hazards model. Using matched data this paper finds both exchange rate level and volatility are the important determinants, and RMB depreciation and greater volatility will deter ODI. Such adverse effect is found more striking for non-SOEs, firms in the eastern region, and non-exporting firms. With China's recent exchange rate formation mechanism reform, the impact of exchange rate uncertainty is expected to be stronger. These findings have important implications for China's exchange rate regime reform and its “Going Global” strategy.

DOI

10.1016/j.iref.2019.11.008

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